Burch & Pruitt

[2023] FedCFamC1F 633

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Burch & Pruitt [2023] FedCFamC1F 633

File number(s):

MLC 2179 of 2021

Judgment of:

BENNETT J

Date of judgment:

8 May 2023

Catchwords:

FAMILY LAW- PRACTICE & PROCEDURE- where matter set down for final hearing and husband’s solicitors file a Notice of Ceasing to Act – wife’s representatives file further valuation evidence which increases value of the husband’s “book” from nil to $2.5 million - where it is abundantly clear that the husband, as an unrepresented litigant, has had insufficient time to ask questions of the valuer, Mr B, or to consider whether he wishes to obtain alternative expert evidence from a person other than the single expert witness. 

1           FAMILY LAW- PRACTICE & PROCEDURE- where adjournment granted.  

Division:

Division 1 First Instance

Number of paragraphs:

20

Date of hearing:

8 May 2023

Place:

Melbourne (via MS Teams)

Counsel for the Applicant:

Mr J Williams

Solicitor for the Applicant:

Mitchell Family Law

Counsel for the Respondent:

Litigant in person

ORDERS

MLC 2179 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS BURCH

Applicant

AND:

MR PRUITT

Respondent

order made by:	BENNETT J
DATE OF ORDER:	8 MAY 2023

THE COURT ORDERS THAT:

1.The further final hearing dates of 9 to 11 May 2023 be and are hereby vacated and the competing applications for alteration of property interests and child support be, and are hereby, released to a date to be fixed.

2.The husband pay the costs of the wife thrown away this day fixed in the sum of $20,000, payable in 30 days.

3.IT IS DIRECTED that the dates allocated for final hearing of this matter be advised to the parties when my diary for 2024 is settled.

4.Subject to paragraph 5 of this Order, if the husband files and serves an affidavit by Mr C, of D Company, the parties are at liberty to call Mr C for preliminary cross examination prior to the commencement of any further hearing for the purpose of finding out facts and matters relevant to the terms of the husband’s employment and his proprietary interests (if any) in the “book of clients”.

5.There be liberty to either party to seek to discharge the entitlement of preliminary cross examination of Mr C on application to me.

6.For the avoidance of doubt, any preliminary cross-examination of Mr C is in addition to and not instead of a parties’ ability to adduce further evidence from him or to cross examine him at the final hearing of this matter.

7.There be liberty to apply in relation to compliance.

8.My reasons for decision this day be transcribed and, when settled, placed on the Court file.

AND THE COURT NOTES THAT Mr C is not considered to be an expert witness.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under a pseudonym Burch & Pruitt has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT
EX TEMPORE

BENNETT J:

1. This matter is listed before me today for final hearing and the self-represented husband seeks an adjournment of the final hearing. 

2. As recently as February 2033, it was estimated by the practitioners as a three to four day case. 

3. Three working days ago, the parties had their third or fourth mediation with Mr E and failed to resolve the matter.  I gather that, as with the other mediations, there was no agreement as to very important valuations or treatment of assets in the divisible assets. 

4. Two working days ago, the solicitors on the record for the husband filed a notice of ceasing to act and withdrew from the proceedings, and the husband has since then been unrepresented.  Today, he attended Court with a friend, Mr F, who left at some stage during the day and his former solicitor, Mr G, who said that he appears as a courtesy to the Court and who has remained. 

5. One document has become a focus in this proceeding. It is a book which contains the wholesale clients that the husband advises. The issue is whether the book of wholesale clients has a value. The husband says that it doesn’t, the wife says that it does. It is common ground that the husband’s book is an asset, interest or entitlement which must and will remain with the husband in an alteration of property interests. 

6. The parties retained a valuer for certain of the husband’s business interests including the husband’s book.  Mr B from H Accountants is a wealth advisor.  The evidence of the value is contained in an affidavit sworn 5 May 2023.  The bulk of that document is a report dated 5 April 2023 which starts at page 29 of 70 of the document which is filed.  Whilst I have not sourced the particular paragraph of the report, I understand that in that report, an interest referred to as the husband’s book is attributed a “nil” value.  It is common ground that the husband’s book is an asset, interest or entitlement which must and will remain with the husband in an alteration of property interests. 

7. At page 64 of 70, a letter dated 4 May 2023, which the author refers to as a “supplementary report”, states that that he has received further instructions or information to the effect that the husband does have proprietary rights in the book.  I am informed that the upshot of the further information, which the valuer has taken into account, is the valuer’s opinion that the husband’s book is worth some $2.5 million. The valuer says that the indications or statements in the correspondence of 4 May are to be read together with the earlier report referred to and a document dated 2 May 2023.   

8. It appears from what I have been told from the bar table that the valuer’s initial reports were done on the basis of an assumption that the husband’s terms of employment had changed when his employer was acquired by an entity called D Company. 

9. The husband attended Court today saying that he was unprepared and unable to conduct the case and sought an adjournment.  The matter was stood down for some hours.  At my direction, Mr G discussed with the husband the formulation of any adjournment application to be made by the husband.  The adjournment is, and always has been, opposed by the wife. 

10. There are a number of planks to the husband’s application for an adjournment, as I comprehend it.  First, whereas he is currently unrepresented, he will retain representation for any further hearing.  Whilst he says he did not have money to put his solicitors in funds as of last Wednesday, he has been introduced to a litigation funding firm and they have given him an indication that he would be eligible for sufficient funding for a hearing lasting between four and seven days.  He says that he will do all acts and things necessary to apply for and take up that offer of litigation funding on a commercial basis.  If he fails to obtain litigation funding through the organisation called J Finance and there was no other commercial litigation funding available, the husband is confident of getting money from his family to fund litigation.  The husband says that on the next occasion he will be prepared.  He says that he wants to, if necessary, get a further opinion in relation to the valuation of “book interest”. 

11. The wife opposes the application for an adjournment on the basis that it is, I think, too little, too late.  There has certainly been a history of noncompliance by the husband with orders that he make disclosure and file documents.  I think there was one document that he did file on time, but that, itself, was a date that was extended past a date for compliance.  The wife’s affidavit material is replete with complaints about lack of disclosure by the husband and his failure to answer questions and to provide documents.  Counsel retained by the wife, Mr Williams, has today said that his client does not believe what the husband says, in any event. 

12. Mr Williams, for the wife, admits that there was a decision made not to return the matter back to Court when noncompliance by the husband was apparent and endangered the matter proceeding to a final hearing.  It is very easy today, with the benefit of hindsight, to say that that was a serious misstep or miscalculation on behalf of the wife.  There was a woeful history of compliance by the husband.  That is not to say that the wife’s record was squeaky clean either, but had the matter been brought back to Court, as I invited the parties to do, some six or eight weeks ago, the very matters of which the husband complains now might have been remedied in time for this hearing to take place.  As it is, this is a hearing date of which the parties have been aware for many months.  They should also be aware, through those who have represented them for the duration of the proceedings, that hearing dates are hard to come by and that one lost could mean a significant delay in the matter proceeding to a hearing. 

13. Parties take a calculated risk when they approach a hearing knowing that the other party has not made disclosure.  At the very highest, the most that the innocent party can do in those circumstances is ask the Court not to be unduly cautious in its calculation of what the other party may have.  That does not mean that the Court makes up property or attributes value to property that is not warranted.  The information apparently taken into account by the valuer, who has changed the balance sheet by some $2.5 million in the last three days, is to rely on a proprietary interest which he is instructed is owned by the husband.  I should make it clear, if I have not already, that the husband denies that he has a proprietary interest in the book and says that that vests in the company that took over his employer. 

14. What became apparent to me on reading the documentation over the weekend was that, by any stretch of the imagination, this is not a case that can be concluded in three or four days.  It might have been a reasonable estimate in skilful hands on both sides, but not with an unrepresented litigant from whom my strong impression is that documents would be forthcoming on a drip feed basis.  The husband is the respondent to the proceedings.  It would be an untenable and unworkable hearing for him to be producing documents as part of his case when the wife’s case would necessarily have already been closed.  The alternative to permitting the husband to produce documents late and at a piecemeal approach would be to exclude them altogether, which, in my view, jeopardises the Court’s duty to make a determination which is just and equitable in all of the circumstances. 

15. Regrettable as it is, there is no alternative but that this hearing be adjourned because the Court will be in a position to do justice to the parties if the matter was to proceed.  It is abundantly clear that the husband, as an unrepresented litigant, has had insufficient time to ask questions of the valuer, Mr B, or to consider whether he wishes to obtain alternative expert evidence from a person other than the single expert witness. 

16. I will grant the application for an adjournment. 

17. Mr Williams, counsel for the wife, made the submission that the husband has at all material times had sufficient cash or resources or assets that would have enabled him to retain solicitors if he wanted to retain them.  One fund pointed to by Mr Williams was funds held by the husband's accountant.  Rather belatedly, the wife says that she found out that there was some $125,000 or so left in the account of the husband's personal accountant.  That was originally some $260,000 or thereabouts.  The husband says that those funds are there but they are earmarked by him for payments of $25,000 a month to the ATO.  Consistently with a lot of the wife's case, she does not accept that there is an overall indebtedness to the ATO of $800,000 or that the husband had entered into an arrangement to pay $25,000 a month in respect of that liability.

18. Given about 10 minutes, under direct instruction by the Court, the husband was able to produce a printout from the Tax Office portal, which does not show that $800,000 was outstanding but does show nine payments of $25,000 on a monthly basis made to the husband's account with the ATO.

19. Further, the wife alleges there are other assets that the husband could have converted to be able to retain solicitors to act on his behalf.  On his own admission, in the last six months the husband has spent some $400,000 on his wedding.  That is all well and good if you have got the money to pay for an expensive wedding but he raised $400,000 for that purpose without thinking that he should raise any money for the final hearing in these proceedings.

20. The husband has a number of vehicles that he could have sold to raise the money.  As of last Thursday when Mr G filed a notice of ceasing to act, Mr G was not going to be taking a motor vehicle in payment of his fees.  If the wife was going to rely on a submission that the husband should be converting assets to cash in order to pay legal fees she should have raised an enforcement application 6 or 8 weeks ago, not on the morning of the trial.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Bennett.

Associate:

Dated:       8 August 2023